The Cypriot Union of Consumers and Quality of Life has called on the government to continue subsidies for vulnerable groups.
This follows an announcement by the Finance Ministry on Thursday, saying that the electricity subsidy and zero per cent VAT on 11 essential goods will end on October 1.
The scheme, active since March 2023, cost €201 million, with inflation stabilising at two per cent, according to the ministry.
In an official statement, the union also issued a demand for stronger consumer protection and a crackdown on market exploitation.
Responding to comments from the Finance Minister, the union acknowledged that “the minister is right, inflation has decreased,” but added that “it would be good to give an explanation, if any, how prices still remain so high”.
While the union does not support long-term subsidies, it emphasised that the decrease in inflation has not benefited consumers.
“The reduction in inflation does not improve the position of consumers at all since the prices of products in general, which have risen uncontrollably over the last two years, have not been reduced at all,” it explained.
The union went on to criticise the growing gap between government finances and household finances.
It pointed out that “apart from the well-known ‘elite’ of 18 to 20 per cent of the favourites of the established system, the rest of the population has received neither a cost of living adjustment (CoLA) nor salary increases”.
The union further argued that the lack of proper consumer protection makes it impossible to combat unfair practices in the market.
“Households are in fact trapped in a vicious cycle of uncertainty, as the government is either unable or unwilling to control, detect and curb obscenity”.
In this context, the union stated that VAT exemptions haven’t made much difference.
It said, “VAT does not hurt that much, which, in any case, it would not be an exaggeration to describe it as a gift without a gift,” adding that, “without proper control, it hasn’t delivered the expected results, as many have been profiteering by raising prices in various ways”.
Electricity prices, the union warned, will be particularly affected by the removal of subsidies.
“But in electricity, which continues to be absurdly among the most expensive in Europe, there will certainly be a negative impact,” it said.
The union also highlighted concerns over fuel prices. Although prices have dropped globally since April, it says local petrol companies have failed to pass these savings on to consumers.
“Despite the alleged ‘formulas’ and controls the companies and the petrol stations they control, continue to increase their profits at the expense of consumers… since they always reduce with delays,” it explained.
What is more, the union pointed to a lack of government control over the market and warned of informal price-setting practices by some businesses.
“Due to the complete absence of controls, unfortunately, the tendencies of some people to create informal small cartels and to set prices arbitrarily at the expense of consumers have increased recently,” it said, specifically referring to the pricing of fresh vegetables.
